Finally, what does Geithner know about this?
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REFERENCE
RUSSIA'S 1998 ECONOMIC COLLAPSE WAS A CAREFULLY-PLANNED FRAUD SINCE IMMEDIATELY BEFORE THE DEFAULT THE RUSSIAN GOVERNMENT HAD RECEIVED $4.8 BILLION FROM THE IMF. MONEY THAT SIMPLY DISAPPEARED.
The Russian default of 1998 had economic and social consequences many times more severe than those of the Great Depression, America's all- time worst financial disaster. In the aftermath of the stock market crash in 1929, 1.5 million Americans lost their jobs - around 1.2% of the US population at the time. But the crash of 1998 left 11.3 million Russian citizens out of work - 7.7% of the population. And those who kept their jobs saw their wages fall by an average of two-thirds, from the equivalent of $160 to $55 a month. Around 40% of Russian citizens found themselves living below the poverty line (which had been deliberately understated in official statistics even before that). By the third year of the Great Depression, the GDP of the United States had shrunk by one-third. Russia's GDP fell by two-thirds in six months, from $422 billion to $132 billion.
In the West, there was immediate talk of Russia's economic collapse having been a carefully-planned fraud. It was hard to draw any other conclusion, since immediately before the default the Russian government had received $4.8 billion from the IMF - the first installment of the biggest loan in Russia's history, totalling $17.1 billion.
The IMF was greatly alarmed. It demanded that the Russian government order an external audit of the Central Bank. This task was given to PricewaterhouseCoopers, one of the most authoritative auditing companies in the US. PWC presented its report to the IMF board of directors on July 9, 1999. It is difficult to obtain a copy of that report now. Viktor Gerashchenko, then-chairman of the Central Bank, desperately opposed making it public. The question was decided by the president of Russia. The report was posted on the IMF website on August 5, 1999; but by September 4 it had been deleted at the request of PWC.
On July 29, 1999 - six days before the report was published - IMF deputy executive director Stanley Fisher held a news conference .....he accused the Central Bank of deliberately deceiving the IMF: the Central Bank had exaggerated its currency reserves by $1.2 billion.
In an interview published in "France Soir" on September 1, 1999, IMF executive director Michel Camdessus acknowledged that a great deal of capital was being taken out of Russia; however, he emphasized that there was no proof of a link between these operations and IMF loans. (Indeed, money carries no inscription indicating its origin.)
At the Central Bank's request, the loan installment was transferred to its affiliate banks in Europe.... But the involvement of FIMACO (Financial Management Company Ltd.) was another matter. FIMACO was registered in the Jersey Islands, an offshore zone, with only $1,000 in starting capital to its name. The IMF had no idea of its existence, and the Central Bank did not inform the IMF that some loan money was being transferred into FIMACO's accounts.
This technique of attracting investment is known as a "Ponzi scheme" in the US, after Carlo Ponzi, a financial fraudster in the 1920s; in Russia, it's called a pyramid. GKO revenues were used to finance Yeltsin's presidential campaign: The fraud scheme was not very complicated.
In carrying out Boris Yeltsin's generous pre-election promises, the Russian government ran out of money - just before the second round of voting in the presidential election. It was forced to borrow from the Central Bank: that very sum......$1.2 billion. In exchange, the Central Bank received a promissory note from the Finance Ministry; this subsequently ended up offshore, with FIMACO. A considerable part of the money was then invested in Russia's GKO state bonds.
It remains uncertain whether IMF loan funds were involved in the money-laundering scheme carried out via the Bank of New York. Bank of NY vice-president Lucy Edwards and her husband Peter Berlin (Russian nationals) were arrested and confessed.
Geneva prosecutors have been unable to prove a link between IMF loan money and the case involving private banks in the Ticino canton (the Mabetex case). The case of Alimzhan Tokhtakhunov (also known as the Olympics scandal) is also a branch of this vast financial fraud, which dwarfs the cases of Enron and WorldCom.
The scandal of the lost loan installment cost Michel Camdessus his job. Nor was he the only casualty.
A major accusation made against Al Gore in the 2000 US presidential campaign was that he had condoned corruption in Russia. As the Republican candidate, George W. Bush repeatedly said that he wanted to review financial aid programs to Russia and stop giving money to "a system in which money is never used for its intended purpose".
SOURCE http://www.cdi.org/russia/johnson/7178-14.cfm